U.A.E. Credit Bureau Could Slam Brakes On Lending

A fully-functional credit bureau in the United Arab Emirates is likely to curb the lending excesses and rise in consumer debt seen in previous years.

But with preparations for the consumer reporting agency in full swing – a group of 12 banks have already started collecting data and making trial runs ahead of full introduction over the next one to two years – some bankers are increasingly concerned about the initial economic disruption the long-awaited project may cause.

“The consequence is banks will stop lending because they will discover every single customer overborrowed,” said Abdulaziz Al Ghurair, chairman of the U.A.E. Banks Federation. “For 6 to 12 months there will be almost zero lending to existing customers who had borrowed up to the limit so the customer will hit a wall,” he said. Mr. Al Ghurair is also chief executive of Dubai’s largest privately-owned bank Mashreq.